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Starbucks strategy case
Starbucks strategy case
Business analysis of Starbucks coffee company
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Starbucks Introduction "Rewarding everyday moments". The Starbucks Mantra clearly implies that they are not selling just coffee. They claim to be selling the coffee experience. Their coffee bars that sell specialty coffee also gives customers an ambience where they can be themselves. Starbucks advertises themselves as the third place between home and office, where you can escape, reflect, read, chat or listen. They have become the largest player in the coffee industry and is still looking for avenues to expand themselves. Problem Statement The two questions that arose in Mr.Schultz's mind captures the problem faced by Starbucks. "Was Starbucks growing in the best way possible?" "Was Starbucks overextending in its quest for growth?" Options in front of Starbucks The dilemma of Howard Schultz right now is what next?. Where does starbucks go from here? The available options in front of them are the following 1. New Specialty Sales partners: The option currently in front of starbucks is to collaborate with McDonalds who has been approaching them for this joint venture. 2. Expansion of Domestic and International retail markets: With the target of 2000 stores by year 2000, Starbucks is on an expansion mode. They are expanding into the international markets and simultaneously they are diversifying in the domestic markets also. Initiatives like Frappuccino and the Doppio cart are part of this. 3. New Products: Right now, Starbucks is not targeting the younger generation well because the youth are not avid coffee drinkers. For this purpose they could launch a range of new products like flavoured coffee which the youth prefers. Analysis of Options While thinking in terms of collaborating with new speciality partners, we have to take care that the brand does not get diluted. Taking the case of McDonald's specifically, there are many factors that need to be considered. Looking at the pros of the proposal, we can see that you can potentially increase the customer base through this collaboration and the brand awareness may increase among the people that come to McDonalds . It might help us in targeting the youth segment that has been proving elusive in the other campaigns. But seeing the other side of the coin, there is a possibility of brand dilution when collaborating with McDonalds because there starbucks coffee might become a secondary product. The association of coffee with burger is not a popular one as burger with coke. So there the starbucks brand will not get the desired visibility. Another point being that the type of consumers who come to McDonalds is different from those who come to Starbucks coffee bars.
Advertisements are the key to gain business and promote a company’s product or services to its consumers. Starbucks is no exception. The coffee giant is “out there;” from television ads to it own line of entertainment.
Opportunities available to Starbucks include growth of its supplier range, expansion to emerging economies, increased diversification of its product offerings and the growth of its retail operations; which are aimed at growing Starbucks’ profitability and market presence.
Question 3: It’s clear that, in general, the company’s growth initiatives were sound in terms of generating the growth expected by Wall Street. But which of Starbucks’ initiatives, in retrospect, were sound decisions for the brand and which were inconsistent with brand
If Starbucks was to partner up with a company that is specialized in making food it might be a risky choice to make.Although branching out might mean increase in a profit, it does not necessarily mean it will succeed. Sometimes partnerships that are specialized in the same industry don’t work, how about partnering up with one that company is specialized in producing food, and one in coffee. This is a definitely a risky action to make.
As mention earlier Starbucks has many opportunities of which it can take advantage. These include a joint venture with McDonald’s, where the restaurant giant would supply its customers with Starbucks coffee. Another is the bottled Frappuccino product that Pepsi and Starbucks have created. This has had a very positive response in the test markets and posses to be a lucrative option. Starbucks could also look at the vertical integration possibility of producing its own beans. This could prove to be very successful if they can capture a significant amount of the production they could become a price setter in the coffee commodities. Also because small coffee retail outlets are so trendy it is possible for them to set ...
Background According to Patterson, Scott, and Uncles (2010), the first Starbucks store was initially established in Seattle’s Pike Place Market in 1971. It has been spread publicly with the rapid expansion since 1992 to over 15,000 branches, new 7 branches every single day, in 44 nations, as a result of being the most enormous coffee chain operator all around the globe. Within one week, Starbucks provides 50 million coffee drinkers in North America.
Starbucks is the world’s largest coffee roaster and retailer of specialty coffee in the world. We have enjoyed great dividend returns over the past 5 years, and our growth has been on the rise. We are currently saturating the US market, while the emerging markets of developing countries offer many possibilities for growth and increased revenues. In our US market we should look at offering more items on the menu that complement our long-standing tradition of pleasing our customers. Exotic Juices, and snacks served with the same service could add a nice margin to the bottom line. In addition, the ability to offer a drive through service for the consumer that loves fine coffee but does not have the time to stop and visit should be on our “trial” market plan for the next few years.
Starbucks plan of a partnership is the best choice for an entry strategy into the international market. Their increased insight into the market, and the other benefits provided by this relationship, will propel Starbucks International into the future.
As with any company considering new products in new markets, there are risks associated with it, and Starbucks would need to be prepared to respond accordingly. With diversification, Starbucks will have the opportunity to increase its growth. Also, this strategy will permit the company to add related or unrelated products to its existing business. This will be the opportunity the company needs in order to expand its products, by offering new products to its customers. If Starbucks is considering diversifying, it’s essential to adopt a strategy that is fitting for the company....
Starbucks takes their partners very seriously as well as their well-being. This is apparent in the rewards Starbucks offers to their partners. Starbucks has what they refer to as, “Your Special Blend” which is offered to part-time and full-time partners. Starbucks offers comprehensive health coverage, a highly competitive 401(k) program with company matching, a stock equity reward program, education benefits including tuition assistance, free coffee, and paid vacation (Your Special Blend: Rewarding Our
Customer base has changed, probably due to overall market change. Also, since the company image has taken an unwanted turn, there is a possible change in the customer base that it appeals to. Starbucks has become a corporate, accessible and consistent place to drink a good coffee on the way to work. Therefore, today it appeals to customers with completely different lifestyles, needs and wants. It may satisfy this new customer base up to a point, but they are not the initially targeted sector. Since nothing has been done to stimulate intellectually the sector targeted in their embryonic stage, they most probably left for independent coffee shops. Starbucks is now appealing to younger people, looking for a quick cup of good coffee, spending less time and money in the
For years, Starbucks is known for its creativity and innovative ideas added to their products or
In addition to being best-known supplier of the finest coffee and promising only the highest quality products, Starbucks emphasizes firm values, provides guidelines to enhance employee self-esteem. This is to ensure continued customer satisfaction. Moreover, diversity has become a priority to providing an inviting environment to all consumers. Starbucks continues to abide by a strict, slow growth policy in which they set out to dominate a market before moving on to expand, thus history has shown this strategy to be successful for Starbucks, making them one the fastest growing companies nationwide.
I will briefly summarize and examine issues facing Starbucks. Starting from there I will pick the most important issue and study it from different positions. In the end of my I will try to suggest what steps should be made to keep the company in continuing its quest to become one of the most recognized and respected brands in the world.